Today, I came across news that Japan plans to significantly cut back on ultra-long-term government bond issuance. Honestly, my first impression is—this is not a proactive move at all; it’s entirely a passive response driven by the current state of the bond market.

The scale of ultra-long-term Japanese government bonds has fallen to a 17-year low. For the 20-year, 30-year, and 40-year bonds, issuance has been cut by 100 billion yen each month. Even the issuance of the most basic 10-year government bonds has been temporarily halted from increasing. What does this really mean? The yields on ultra-long-term Japanese bonds have already soared to historic highs, and the market’s anxiety over oversupply is about to become unmanageable. The Ministry of Finance of Japan is rushing to "firefight."

In the short term, this move might indeed help cool down the bond market. Reduced supply naturally eases selling pressure, and the upward trend in yields could be contained. The yen might even benefit from this. After all, the market could interpret this as a signal—the Japanese government is trying to stabilize debt expectations. Sounds good.

But the problem is, this is just surface-level action. Japan’s economy has long been sluggish, relying heavily on borrowing to sustain fiscal stimulus. Now, by cutting ultra-long-term bond issuance, the government’s discretionary budget shrinks, and infrastructure, pensions, and other areas will be squeezed. How much can economic growth really improve under these circumstances?

More critically, if the market sees through the fact that Japan is only making short-term fixes and has no real intention of fiscal reform, this panic will eventually rebound. Coupled with the tug-of-war between the Bank of Japan’s monetary policy and the fiscal authorities, problems will only accumulate. Simply put, these band-aid solutions often lay the groundwork for bigger problems down the line.